Friday, October 24, 2008

Schadenfreude

Do you find pleasure felt at someone else's misfortune?

Schadenfreude is a normal human emotion. If you have looked at your retirement accounts lately you surely aren’t feeling Schadenfreude. The Economic Stabilization Act of 2008 hasn't helped yet. President Bush sign the legislation on October 3, 2008 only three weeks ago. On October 3, 2008 the DJIA’s closed at 9258.1 and it closed on October 24, 2008 8159.21. This represents a 12% change. The Economic Stabilization Act of 2008 has an ownership stake in Fannie Mae, Freddie Mac, AIG, Citigroup, JPMorgan Chase, Wells Fargo, Bank of America, Merrill Lynch, Goldman Sachs, Morgan Stanley, Bank of New York and State Street. The Economic Stabilization Act was sold to America as a program which was to buy mortgage assets from any U.S.-based financial institution. The US Treasury said Tuesday it had hired accounting firms PricewaterhouseCoopers and Ernst & Young to help with its emergency buyouts of toxic assets from troubled financial institutions. The Treasury announced on October 13 it had hired Ennis Knupp & Associates as its investment adviser for the massive Troubled Asset Relief Program. Everyone is starting to feel that things are not changing fast enough.

Initially the Europeans had an outburst of schadenfreude about the US financial crisis. Now, evidence is piling up that Europe is facing a serious slowdown. Meanwhile there are doubts whether Europe is reacting quickly enough. Europe lacks the flexibility of US in dealing with this crisis.

History tells us that if the US enters recession the rest of the world will follow, but the US will be the first to emerge from a recession.